Agfa revenue and profit fall continues in Q2

Agfa revenue and profit fall continues in Q2

Agfa’s revenue and gross profit both declined in Q2, continuing the trend seen in Q1.

Agfa recorded sales of €559m in Q2

The Belgian manufacturer recorded sales of €559m (£503m) in the second quarter, down 10% on Q2 2017, with first-half sales standing at €1.11bn, down 8.4% year-on-year.

The company’s gross profit fell by 15.5% to €180m in Q2, with first-half gross profit down by 11.7% to €358m. Gross profit margin was 32.2% in Q2, which Agfa said was in line with Q1.

Group recurring EBITDA was down by 19.5% to €49m and represented 8.7% of revenue, down from 9.7% in Q2 2017.

Agfa said its top-line decrease was “strongly impacted” by the previously announced product portfolio reorganisation in the group’s pre-press business and by the strength of the euro. It said its revenue decline was limited to 3.6% when excluding these elements.

By division, Agfa Graphics’ revenue fell by 15.5% in Q2 to €261m, while sales in the Healthcare division dropped by 5.7% year-on-year to €248m. Q2 revenue in the Specialty Products unit, which develops items such as printed circuit boards and synthetic paper, grew by 1.4% to €50m year-on-year.

Agfa Graphics’ pre-press segment top-line was impacted by the strong market-driven decline for analogue computer-to-film products and by the pressure on volume for the digital CTP product offerings, the group said.

Agfa said customers’ reluctance to invest in anticipation of the new machine partly explained the “somewhat sluggish” equipment sales in the inkjet segment.

The Graphics division’s gross profit margin decreased to 27% of revenue in Q2 2018, from 30.4% in Q2 2017, mainly due to product and regional mix effects as well as the high aluminium price, Agfa said.

The group’s net financial debt amounted to €55m, versus €18m at the end of 2017.

In a call to analysts shortly after the results were released this morning (22 August), Christian Reinaudo, president and chief executive of the Agfa-Gevaert Group, said the figures “did not yield any major surprise”.

“We will stick to our medium-term targets, which are obviously to come to a growth path for both businesses and to deliver a 10% EBITDA average in the years to come.

“For this year, I don’t expect the EBITDA to be better than last year, and for the top-line I still hope we will be able to show some slight improvement compared to the decline rate [seen in the first half]. This is of course dependent on the way the market evolution will be in the second half of the year.”

Agfa-Gevaert’s share price fell by 9.8% to €3.60 on the publication of the results this morning but has since risen to €3.74 at the time of writing.